Economics of Conservation Tillage in a Wheat-Fallow Rotation
Pacific Northwest Conservation Tillage Handbook Series No. 16
Chapter 10 – New Technology Access, Adaptation and Economics, February 2002
Author:
Jeff Janosky, former WSU graduate student;
Doug Young, WSU Agricultural Economist, Pullman; and
William Schillinger, WSU Dryland Research Agronomist, Lind, WA
Abstract
Wind erosion and blowing dust on conventionally tilled winter wheat (Triticum aestivum L.)-summer fallow cropland in eastern Washington, USA, reduces soil productivity and can contribute to poor air quality. Conservation tillage during fallow has long been known to curtail erosion and dust, but conventional tillage is still practiced on over 80% of the cropland in the region. This paper reports the economic results of a 5-year (1995-1999 harvest years) tillage system study at Lind, Washington. The site averages 9.6 inches annual precipitation and the soil is a Shano silt loam. Tillage systems were i) conventional tillage (CT), ii) minimum tillage (MT, herbicides and tillage), and iii) delayed minimum tillage (DMT, herbicides and delayed tillage). Wheat grain yield across years ranged from 27 to 77 bushels per acre, but there were no differences in grain yield among tillage systems in any year or when analyzed across years. Tillage systems were economically equivalent based on market returns over total production costs, but DMT was slightly less profitable than CT based on market returns over variable costs. Economic analysis indicates that no subsidies should be required to entice producers to switch from CT to MT fallow because the systems are equally profitable. Because there is no short or long-term economic sacrifice for converting to the soil saving MT system, it represents a “win-win” solution for farmers and the environment.
Abbreviations: CT, conventional tillage; DMT, delayed minimum tillage; HRSW, hard red spring wheat; MT, minimum tillage; SWWW, soft white winter wheat.
Introduction
While the land area under summer fallow in the USA has declined during the past three decades, the winter wheat-fallow rotation remains the dominant cropping system in areas receiving less than 14 inches annual precipitation (Dhuyvetter et al., 1996; Smith and Young, 2000). In eastern Washington state and north-central Oregon, winter wheat – summer fallow is the prevailing cropping system on approximately four million acres. Farmers in the northern Great Plains have markedly reduced wind erosion on fallow cropland by adopting minimum tillage and no-tillage practices and recent evidence shows similar reductions in windborne dust and wind erosion in the Pacific Northwest (Lee, 1998).
The Conservation Tillage Information Center (CTIC, 1998) reported that farmers in the western Great Plains and Pacific states used minimum and no-tillage on 34% of cropland. However, in Washington state, only 26% of cropland was in minimum and no-tillage (CTIC, 1998). In east-central Washington, where annual precipitation typically ranges from 6 to 12 inches, even minimum tillage fallow is rare. For example, in Adams County, the heart of Washington’s wheat-fallow area, CT is still practiced on 88% of the cropland.
Most previous studies of the economics of no-tillage and minimum-tillage in wheat-fallow systems have been conducted in the U.S. Great Plains and the Canadian Prairies. Reviews of this work have found that the relative profitability of these reduced tillage systems in semiarid regions varied by location; however, reduced tillage generally increased net returns when crop planting intensity also increased (Dhuyvetter et al., 1996). While these systems offer recognized soil and air quality benefits, some researchers have reported higher production costs for no-till (Norwood and Currie, 1998; Zentner et al., 1996). Smith et al. (1996) reported that the presence of difficult-to-control weeds can greatly elevate herbicide and total production costs for no-till in semiarid regions. However, recent case studies of experienced no-till farmers in a semiarid region of eastern Washington revealed that their production costs for spring sown crops were lower than with conventional tillage (Camara et al., 1999).
Conventional tillage practices during fallow are intensive and often leave the soil vulnerable to erosion. A soil surface deficient in residue, clods, and roughness can pose a serious wind erosion threat (Fryrear and Bilbro, 1994). Conservation tillage systems in the inland Pacific Northwest generally employ non-inversion implements such as wide-blade V-sweeps for primary spring tillage, combined with use of herbicides in lieu of one or two tillage operations, and retain higher levels of surface residue and soil roughness during fallow compared with conventional tillage (Papendick, 1998). Lee (1998) predicted that suspended dust particulates 10 micrograms (PM-10) and smaller in Spokane, Washington, would be reduced by 31 to 54% if conservation tillage or no-tillage replaced conventional summer fallow.
Both the Spokane and Tri-Cities urban areas in eastern Washington have failed on several occasions to meet the Federal Air Quality Standards for PM-10. One such occasion was during a massive dust storm on September 25, 1999 when PM-10 reached 405 ug -3, nearly three times the national allowable standard of 150. On that day, seven motorists were killed and 22 injured in a multi-vehicle collision in near-zero visibility on Interstate 84 near Pendleton, Oregon. Violations of federal air quality standards mandate that regional air quality agencies develop plans to solve this problem.
Why don’t most wheat-fallow farmers in the inland Pacific Northwest practice conservation tillage? Some farmers cite concerns of inadequate seed-zone water for winter wheat stand establishment (Lindstrom et al., 1974), difficulty in controlling downy brome (Bromus tectorum) and other grass weeds (Ogg, 1993), and plugging of grain drills due to excessive residue as reasons for not adopting conservation tillage fallow. Concerns about the financial risk from investing in conservation tillage implements also appears to underlie the reluctance by some eastern Washington farmers to adopt conservation tillage fallow systems (Juergens et al., 2001). This paper reports on grain yield performance and profitability of MT and DMT compared with CT for wheat-fallow farming in semiarid eastern Washington.
Materials and Methods
Description of Experiment
A wheat-fallow rotation tillage system experiment was conducted from August 1993 to July 1999 at the Washington State University Dryland Research Station at Lind, Washington. Although the first fallow operations occurred in 1993, the research is referred to as a 5-yr study as wheat harvests occurred from 1995-1999 (Table 1). The Shano silt loam soil is more than
six feet deep with less than 2% slope. The experimental design was a randomized complete block of three tillage systems replicated four times. Individual plots were 60 by 150 feet, which allowed the use of commercial-size farm equipment. Paired adjacent parcels of land were used so that data could be collected from both crop and fallow phases of the study each year. The three tillage management systems were: i) Conventional tillage (CT) – standard frequency and timing of tillage operations using implements commonly used by farmers; ii) Minimum tillage (MT) – standard frequency and timing of tillage operations, but herbicides were substituted for tillage when feasible and a non-inversion V-sweep implement with attached rolling harrow was used for primary spring tillage, and; iii) Delayed minimum tillage (DMT) – similar to minimum tillage except primary spring tillage with a non-inversion V-sweep was delayed until at least mid-May. The DMT system was included to test its impact on soil moisture retention and wind erosion control as well as economic feasibility. A complete list of field operations and timing for each tillage system throughout the study are shown in Table 1. Detailed descriptions of tillage and other field operations for all tillage systems are reported in Schillinger (2001).
Economic Analysis
Standard enterprise budgeting techniques were used to estimate average fixed and variable costs of production for each tillage system (Janosky, 1999; Hinman and Esser, 1999). Fixed costs include depreciation, interest, taxes, housing, and insurance on machinery and a farm overhead charge. Land costs were based on the region’s prevailing 2/3 tenant:1/3 landlord crop share rent which varied by annual yields. Variable costs include seed, fertilizer, herbicides, crop fire and hail insurance, fuel, repairs, and labor. Production costs for each tillage system were based on the actual sequence of operations conducted in the experiment (Table 1), but assume typical farm-scale machinery for the region. The wide blade V-sweep was the only additional implement required for switching from CT to MT or DMT. Fertilizer, herbicide, and seed rates are those used in the Lind experiment (Table 1). Grain yields are the 1995 to 1999 averages recorded from the experiment (Table 2). All cost and revenue figures are presented on a per rotational acre basis. For example, for winter wheat-summer fallow, costs and revenues are computed for 0.5 acre of winter wheat and 0.5 acre of fallow. This correctly portrays the average return per acre each year of a farmer who has one half of the farm in fallow and one half in winter wheat. For the economic analysis, it is assumed that farmers in this region will incur the cost of replanting their winter wheat crop to spring wheat one year in five due to inadequate winter wheat stands or winter kill. This occurred in the Lind experiment for all tillage systems due to inadequate seed-zone water for planting winter wheat in September 1994.
The wheat prices used, $3.92 per bu. for soft white wheat (SWWW) and $5.10 per bu. for hard red spring wheat (HRSW), are regional benchmark 1993-1997 marketing year averages of farm gate prices in the study area. A sensitivity analysis is included to show the effects of a broader range of wheat yields and prices, including prices below $3.00 per bushel, as observed in 1998 and 1999. Net market returns are defined as market returns over production costs. Government transition, supplemental, and loan deficiency payments, which were substantial in 1998 and 1999, are not included. Adding government payments would not influence the ranking of the tillage systems as the decoupled transition and supplemental payments do not vary with the tillage system. However, at the whole-farm level, these payments would affect judgements about economic viability, regardless of tillage choice.
Results and Discussion
Yields, Residue, and Water Storage
Winter wheat grain yield from 1995 to 1999 ranged from 27 to 77 bushels per acre. There were no significant statistical differences in grain yield among tillage systems within any year or in the 5-yr average (Table 2). While not statistically significant, the yields for MT exceeded or equaled those for CT every year. Retention of surface residue at the end of the 13-month fallow period averaged 690, 1240, and 1290 pounds per acre for CT, MT, and DMT, respectively (Schillinger, 2001). Using CT, the minimum quantity of surface residue required for highly erodible soils for government farm program compliance (350 pounds per acre) was not achieved in one year of the experiment and was only marginally met in another, whereas ample residue was present in all years in the MT and DMT systems. In addition, twice the amount of surface clod mass and a rougher surface was achieved with MT and DMT compared with CT. Averaged over all fallow cycles, soil water content in the 0 to 8 inch seed zone depth as well as in the entire six foot soil profile was not affected by tillage system (Schillinger, 2001). Therefore, CT held no agronomic advantages over MT or DMT in this experiment, but it did have distinct environmental disadvantages.
Profitability and Sensitivity Analysis
Variability in market net returns reflects different yields and production costs over the 5-year experiment. As noted above, wheat prices were held constant over time and tillage system. For the 5-year experiment, net returns over total costs for the three tillage systems were not statistically different at the 0.05 significance level (Table 3). The differences in mean profitability among tillage systems was not significant. Measured by net returns over variable costs, DMT was less profitable than the other two tillage systems at the 0.05 significance level. Based on the average prices and yields, market returns of all three tillage systems fell short of covering total costs by $10.90 to $16.20 per acre. Total costs include a wage for the operator, a land charge, machinery depreciation, interest costs, as well as variable input costs. Negative market net returns over total costs are fairly common in grain production when government payments are not included. In part, this is because the value of government payments are capitalized into land values thus increasing costs. In the absence of government payments, land costs would decrease for owner operators and market returns might more closely cover costs.
The results in Table 3 are based on average prices and yields; however, market prices and farm yields vary widely over time. For example, a 5-year average price of $3.92 per bu. for SWWW was used in this analysis, but wheat prices in the region fell sharply to $2.40 and $3.00 per bu. during 1998 and 1999. Similarly, dryland wheat yields in this region vary substantially from year to year as shown in Table 2. To illustrate the effect of price and grain yield variation on market net returns, Table 4 shows net return sensitivity to different price and grain yield combinations for DMT, MT, and CT. Sensitivity results for MT, the most competitive conservation tillage system, are discussed here to illustrate the effects of price and yield variability. If MT wheat averages 60 bu. per acre and a price of $4.00 per bu. is received, market returns over total costs equal $3.98 per acre. Prices of $3.50 per bu. or less are shown to generate losses before government payments for all yields of 65 bu. or less (Table 4). Given the experiment’s 1996-99 average grain yield for MT of 58 bu. per acre (this yield falls between the discrete values in Table 4), one can compute that a price of $4.00 per bu. is required to cover the total cost of $115.90 per rotational acre. Table 4 shows that if grain yield for MT falls below 45 bu. per acre, as occurred in 1999 (Table 2), the farmer will fail to meet total costs from market sales even with the relatively high wheat price of $5.00 per bushel.
Conculsions
Results from this 5-year study show no statistical difference in grain yield among two minimum tillage fallow systems and a conventional tillage fallow system. The three tillage systems were economically equivalent based on market returns over total production costs. The reduced tillage systems promise potentially greater future productivity by controlling wind erosion. Furthermore, the reduced tillage systems reduce the risk of government payment denial due to inadequate residue for compliance. Economic analysis indicates that no or minimal subsidies should be needed to entice producers to switch from conventional to reduced tillage fallow because the systems are equally profitable. This is especially true for the MT system which had statistically equivalent profitability with CT for both net returns over variable and total costs. Because there is no significant short or long-run economic sacrifice for converting to soil saving MT fallow systems, they represent best management practices for both farmers and down-wind urban dwellers. Extension education programs should highlight both the economic and conservation advantages of MT.
Acknowledgments
The authors thank Harry Schafer, WSU agricultural research technician, and Bruce Sauer, farm manager of the WSU Dryland Research Station at Lind, for their excellent technical assistance. Funding for this study was provided by the Columbia Plateau Wind Erosion/Air Quality Project and the Solutions to Environmental and Economic Problems (STEEP) Project.
References
Camara, O.M., D.L. Young and H.R. Hinman. 1999. Economic case studies of eastern Washington no-till farmers growing wheat and barley in the 8-13 inch precipitation zone. Washington State University Cooperative Extension Bull. EB1885, Pullman, WA.
CTIC (Conservation Tillage Information Center). 1998. Crop residue management statistics. http://www.ctic.purdue.edu.
Dhuyvetter, K.C., C.R. Thompson, C.A. Norwood, and A.D. Halvorson. 1996. Economics of dryland cropping systems in the Great Plains: A review. J. Prod. Agr. 9:216-222.
Fryrear, D.W. and J.D. Bilbro. 1994. Wind erosion control with residues and related practices. p. 7-17. In P.W. Unger (ed.) Managing Agricultural Residues. Lewis Publ., Boca Raton, FL.
Hinman, H.R. and A.E. Esser. 1999. 1999 Enterprise budgets for summer fallow-winter wheat rotations and hard red spring wheat annual cropping, Adams County, Washington State. Washington State University Cooperative Extension Bull. EB1883, Pullman, WA.
Janosky, J.S. 1999. An economic analysis of conservation tillage cropping systems in Eastern Washington. M..A. thesis. Dep. of Agricultural Economics, Washington State University, Pullman, WA.
Juergens, L.A., D.L. Young, R.D. Roe, and H.H. Wang. 2001. Preliminary farmer survey results on the economics of the transition to no-till. Technical Report 01-4. Dep. of Crop and Soil Sciences, Washington State University, Pullman, WA.
Lee, B.-H. 1998. Regional air quality modeling of PM 10 due to windblown dust on the Columbia Plateau. M.S. thesis. Dep. of Civil and Environmental Engineering, Washington State University, Pullman, WA.
Lindstrom, M.J., F.E. Koehler, and R.I. Papendick. 1974. Tillage effects on fallow water storage in the eastern Washington dryland region. Agron. J. 66:312-316.
Norwood, C.A. and R.S. Currie. 1998. An agronomic and economic comparison of wheat-corn-fallow and wheat-sorghum-fallow rotations. J. Prod. Ag. 11: 67-73.
Ogg, A.J., Jr. 1993. Control of downy brome (Bromus tectorum) and volunteer wheat (Triticum aestivum) in fallow with tillage and pronomide. Weed Tech. 7:686-692.
Papendick, R.I. (ed.). 1998. Farming with the wind: Best management practices for controlling wind erosion and air quality on Columbia Plateau croplands. Washington State Univ. CAHE Misc. Publ. MISC0208., Pullman, WA.
Schillinger, W.F. 2001. Minimum and delayed conservation tillage for wheat-fallow farming. Soil Sci. Soc. Am. J. 65:1203-1209.
Smith, E.G., T.L, Peters, R.E Blackshaw, C.W. Lindwall, and F.J. Larney. 1996. Economics of reduced tillage in crop-fallow systems. Canadian J. Soil Sci. 76: 411-416.
Smith, E.G. and D.L. Young. 2000. Requiem for fallow in western North America. Choices 1:24-25.
Zentner, R.P., B.G. McConkey, C.A. Campbell, F.B. Dyck, F. Selles. 1996. Economics of conservation tillage in the semiarid prairie. Canadian J. of Plant Sci. 76: 697-705.
Table 4. Market returns over total costs as affected by soft white winter wheat price and grain yield for three fallow tillage systems (shaded areas show negative net returns).
Wheat Price ($ per bushel)
